True or False

_____11. If a projects payback period is greater than the maximum acceptable payback period, then

the project should be accepted.

______ 12. A weakness of the payback period capital budgeting method is that the appropriate or

maximum payback period is a subjectively determined value.

______ 13. When using the Net Present Value (NPV) method of capital budgeting analysis, a firm will

undertake a given project only if the present value of the cash flows generated by the

investment is less than the initial cost of the investment at t = 0.

______ 14. In Net Present Value (NPV) analysis, the discount rate or interest rate used to discount the projects

cash flows back to the present time is the minimum return that must be earned on a project to

satisfy the firms investors.

______ 15. When using the Profitability Index (PI) analysis method, the decision rule is to invest in a

project that has a Profitability Index value less than 1.0 .